As an economist, I am regularly asked on the campaign trail three questions.  First, what caused our current economic problems?  Second, what needs to be done to fix our economy?  Third, what are the future challenges for our economy?  Let me try and answer all of those.

Two problems caused our current economic problems: excessive reliance on debt and falling home prices.  The United States government, our financial institutions, and the American consumer have relied too heavily on debt to fund expansion and consumption.

The United States Federal government is estimated to have unfunded liabilities of more than $50 trillion dollars due to retiring baby boomers.  American financial corporations like Freddie Mac and Fannie Mae hold trillions of dollars of debt.  The American consumer owes nearly $1 trillion in credit card debt.  Unfortunately, the United States tax code encourages borrowing by making many forms of debt tax deductible while discouraging savings by taxing investment.   The United States of America cannot continue to borrow its way to prosperity, we simply must save more.

The other major problem in the United States economy is falling home prices.  Fundamentally, home prices simply became too expensive for most people and their incomes.  However, falling home prices have also prompted a wave of foreclosures and losses on loans by financial institutions.  Many hard working families simply purchased homes they could not afford and used risky loan products pushed by financial institutions.  Financial institutions would not be failing if home prices had not dropped by more than 30%.  The important factor for the government is to prevent the financial problems from causing an economic recession or worse.

To put our economy on a more sustainable path, a number of reforms are needed.  First, it is important to stabilize financial institutions so that credit worthy consumers and corporations can have access to credit for our economy needs.  I personally know perfectly credit worthy people trying to buy homes today that cannot due to a freezing of the credit market.  Second, we need to move our system of taxation to one that encourages savings and investment rather than borrowing.  We cannot continue to borrow our way to prosperity.  Third, we need to restructure as many mortgages as possible to prevent further foreclosures.  Pain should be shared equally so that neither banks, consumers, or government are unfairly burdened.

Our economy faces some big challenges in the future.  The United States national debt is nearly $10 trillion.  The first thing we need is to balance the United States budget .  It is vital that we control spending to balance the budget.  We cannot borrow our way to prosperity. 

We must also begin to address unfunded liabilities like Social Security and Medicare.  It is estimated the United States has more than $50 trillion in unfunded liabilities to Social Security and Medicare in the form of promises to future generations.  If we don’t begin to account for the money we have promised future generations through Social Security and Medicare, it will bankrupt the United States and those programs will not be there for the people that need them.

These may not be the most politically correct or sensitive statements about our current economic situation.  However, I believe firmly that the American public and people of the 34^th district are capable of understanding the facts and making a decision about the candidate most qualified to lead.

If there are any questions I can answer, please do not hesitate to contact me.  I look forward to meeting you.

Sincerely,

Christopher Balding

Candidate for the 34th District